The US stock market is having a rough morning, with concerns about an economic slowdown and the impact of Donald Trump’s policies on the rise. But what’s really going on?
A New Coronavirus Discovery Sparks Fear
Reports are emerging that a Chinese team, led by renowned virologist Shi Zhengli, has found a new bat coronavirus that could infect humans in the same way as Covid-19.
This news has spooked some investors, and it’s not hard to see why.
Shi Zhengli, also known as the “batwoman,” has been at the center of the controversy surrounding the origins of Covid-19, with some theories suggesting it came from a lab leak in Wuhan.
Trump’s Policies Add to the Uncertainty
US President Donald Trump’s trade war policies are also being blamed for the market slump. Analysts say that the upbeat mood among US businesses at the start of the year has evaporated, replaced by a darkening picture of uncertainty, stalling business activity, and rising prices.
As S&P Global’s Chris Williamson puts it, “A concern is the sharp, tariff-related, jump in manufacturing input prices, which will likely either put further upward pressure on inflation in the coming months or further squeeze profit margins among US companies.”
Lackluster Retail Sales and Tepid Forecasts
The lackluster US retail sales data and a tepid forecast from Walmart have raised questions about the outlook of the US economy.
With President Trump pressing on with tariffs and government job cuts that could boost unemployment, it’s no wonder investors are getting nervous.
Tom Cahill of Ventura Wealth Management sums it up: “You are starting to see some disappointment in the economic data.”
The Numbers Don’t Lie
The numbers are telling a similar story. On Friday, an S&P Global reading on US services industry activity fell to a 25-month low, while a University of Michigan survey of consumer sentiment tumbled nearly 10 percent from January
. LBBW’s Karl Haeling says that these “secondary” economic reports corroborate other major data points on employment and retail sales that have also pointed to weakness.
A Tough Day for Wall Street
The S&P 500 index finished down 1.71 percent at the close of trading on Friday, with only consumer staples finishing in positive territory.
Technology, industrials, energy, and consumer discretionary all lost about two percent or more. UnitedHealth Group was a particularly big loser, dropping 7.3 percent after allegations of directing doctors to make patient diagnoses that would trigger higher government payments under the US Medicare Advantage program.
What’s Next?
As investors navigate the uncertainty surrounding the US economy and the impact of President Trump’s policies, one thing is clear: the market is getting increasingly nervous.
With the discovery of a new coronavirus and the ongoing trade wars, it’s going to be a bumpy ride. Stay tuned for further updates!